Summary: We present budgetary and distributional estimates for three potential versions of the lump-sum payment that President Trump announced earlier today. All three options increase the after-tax income of low income households the most. However, higher-income households have more children on average and would receive larger cash payments unless additional adjustments are made.

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Analysis of Estimate

Table 1. Distribution of Net Benefits

Option 1: Non-taxable payments
Option 2: Taxable payments
Option 3: Non-taxable payments with phaseout

Option 1: Non-taxable payments
Income group	Average benefit	Percent change in after tax income	Share of benefit	Share of federal taxes paid
Income group	Average benefit	Percent change in after tax income	Share of benefit	Under current law	Under the proposal
Bottom quintile	$1,180	39.2%	20.0%	0.0%	-2.1%
Second quintile	$1,505	6.6%	19.6%	2.3%	0.5%
Middle quintile	$1,595	3.7%	20.0%	10.2%	9.2%
Fourth quintile	$1,895	2.5%	20.6%	19.1%	19.0%
80-90%	$2,250	1.9%	10.0%	15.0%	15.5%
90-95%	$2,355	1.4%	4.9%	10.9%	11.6%
95-99%	$2,345	0.8%	3.9%	16.4%	17.7%
99-99.9%	$2,375	0.3%	0.9%	12.7%	14.0%
Top 0.1%	$2,310	0.0%	0.1%	13.0%	14.4%

Option 2: Taxable payments
Income group	Average benefit	Percent change in after tax income	Share of benefit	Share of federal taxes paid
Income group	Average benefit	Percent change in after tax income	Share of benefit	Under current law	Under the proposal
Bottom quintile	$1,175	39.1%	23.2%	0.1%	-2.0%
Second quintile	$1,355	5.9%	20.2%	2.3%	0.7%
Middle quintile	$1,350	3.2%	19.2%	10.2%	9.4%
Fourth quintile	$1,585	2.1%	20.2%	19.1%	19.1%
80-90%	$1,740	1.4%	9.1%	14.9%	15.5%
90-95%	$1,795	1.1%	4.0%	11.0%	11.6%
95-99%	$1,680	0.6%	3.0%	16.3%	17.5%
99-99.9%	$1,520	0.2%	1.0%	12.7%	13.8%
Top 0.1%	$1,495	0.0%	0.0%	13.0%	14.2%

Option 3: Non-taxable payments with phaseout
Income group	Average benefit	Percent change in after tax income	Share of benefit	Share of federal taxes paid
Income group	Average benefit	Percent change in after tax income	Share of benefit	Under current law	Under the proposal
Bottom quintile	$1,180	39.2%	23.2%	0.1%	-2.0%
Second quintile	$1,505	6.6%	22.7%	2.3%	0.5%
Middle quintile	$1,595	3.7%	23.2%	10.3%	9.1%
Fourth quintile	$1,690	2.2%	21.2%	19.1%	18.9%
80-90%	$1,760	1.5%	9.1%	15.0%	15.5%
90-95%	$235	0.1%	0.6%	11.0%	11.9%
95-99%	$5	0.0%	0.0%	16.3%	17.8%
99-99.9%	$0	0.0%	0.0%	12.7%	13.9%
Top 0.1%	$0	0.0%	0.0%	13.0%	14.2%

Note: “Income” is defined as AGI plus: above-the-line deductions, nontaxable interest income, nontaxable Social Security benefits, nontaxable pensions and annuities, employer-side payroll taxes, and corporate liability. For this short-run analysis, the corporate income tax is assumed to be borne entirely by the owners of corporate equity. Federal taxes included are individual income, payroll, and corporate income taxes.

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